That's closer than they normally go around that corner (in excess of 100mph) but most F1 drivers tend to put 2 tyres on the green part of that particular kerb every time and half less than a tyres width gap between them and the wall.The corner is referred to as "the wall of champions" because so many great drivers have hit it before, sometimes just leaving a black tyre mark and sometimes taking half the car off.

Definitely. Another inch or two over and he could have been toast. Here's a video showing Valtteri Bottas clipping the wall, and what happens immediately after. In this case it didn't cause much damage to the car as he went on to place 5th, but it was obviously a massive setback for the team.

because he wasn't very good for F1 terms. he made lots of errors and while he did have very good drives here and there, there where many races where he had little pace. Furthermore, he showed no signs of improving. Sergio and Hulkenberg are much better combo than Sutil and Resta.

Watch F1 cars during qualifying at Monaco. They don't get this close, but they often get within a few inches of the barriers while going over 100mph where a slight tap can send your car bouncing off the barriers like a pinball machine.

He probably thought he was going to hit the wall. After a few laps you get a feel for where your car should be each time you go around that corner. When the car begins to slide out even just a few inches past where you normally are, you can feel it and you get a bit of a pinch in your butthole. A driver doesn't try to get THAT close to the wall, even though its the fastest because you are using all of the track, but they do try to get as close to the wall as they can while leaving a tiny tiny margin for error.